Shanghai China Snippets Observations about living in Shanghai and China in general

I had never heard the term before, my bad, but it appears people refer to the stock market in China as “dubo ji”, meaning slot machine.

The NY Times has a very insightful and entertaining article about what drives small investors to buy.

Millions of everyday investors rushed blindly into stocks, emptying out their savings account to “play the market,” as many of them say.

Perhaps the most remarkable sign of the recent irrational exuberance underpinning China’s stock markets was that during the last year, when a company announced bad news, its stock price shot through the roof.

Early this year, for instance, when a group of 17 Chinese companies was cited by regulators for misappropriating corporate funds, their stock prices all skyrocketed.

When the Tianjin Global Magnetic Card Company failed to report quarterly earnings last April, its stock doubled.

In this current run of market mania, even corruption appears to be a buy signal. That was the case for the Shanghai Bailian Group, which reported on Dec. 29 that its chairman was under investigation for fraud. The company’s shares have climbed 45 percent since then.

Two weeks ago, after the chairman of the Shanghai Hai Niao Enterprise Development Company was detained, his company’s shares rose 15 percent.

So how does an investor learn about companies to invest in.

Again from the NY Times

Just to find names of stocks to buy is a task for new investors. So if they see even a mention in the press, positive or negative, they start buying. If alert investors are lucky, they might get a tip. If state television mentions a company, it must be worth something, and if they don’t catch the full story, they at least have a name.

In any case, many investors here seem to believe that the secret to picking stocks is luck and confidence in the government, not the fundamentals of any particular company.

“I don’t know how to choose a stock,” says a 61-year-old retiree who gave her name as Miss Hou at a local brokerage house a few weeks ago. “But I trust those technology companies. Maybe the names of some companies sound lucky to me, so I choose to buy these stocks.”

A lot more visitors today searching for information about the plummeting Shanghai Stock Market. Unfortunately for them they all ended up on my old post about the now long gone Xiang Yang Market.

Are there parallels between the two of them? The Xiang Yang full of fake products and the Stock market full of cheap profit.

I’m not an investor so I know less about that but I do have the feeling that the stock markets were overheating as everyone and their granny seems to be buying stock.

It’s a bit like the real estate market in Shanghai where the average buyer hopes to make a quick buck. As it is, many will get disappointed if there is no short term gain. Live and learn, there is no such thing as easy money. Long term there will likely be profit.

For better insightful comments about the Shanghai Stock market and it’s latest state read more here or do a Google news search

PSV, a Dutch football club from Eindhoven recently hired Sun Xiang form the Shenhua Shanghai football team.
Partly because he is a talented player and partly because of the marketing value. PSV is sponsered by electronics multinational Philips and a Chinese player will attract lots of press in China.

Sun Xiang made history as he became last wednesday the first Chinese ever to play in the Champions League in a match against Arsenal, an event that got a lot of headlines.

The side effect is that PSV is doing the best Holland promotion possible in China and tax payers don’t even have to pay for it.

Hat tip to a modern Lei Feng